CHICAGO (Reuters) - The cash-strapped Chicago Public Schools (CPS) said it sent $464 million to its teachers’ pension fund by Friday’s fiscal year-end deadline, leaving an additional $250 million payment to be made in the fall.
Unlike other Illinois school districts, which are part of a state-wide teachers retirement system subsidized with state dollars, CPS has its own pension fund.
“Only CPS has to take hundreds of millions of dollars out of the classroom for teacher pensions, but despite the unfairness of this law, CPS is meeting its obligation to our teachers’ pensions today,” CPS CEO Forrest Claypool said in a statement.
Escalating pension payments have led to drained reserves, debt dependency and junk bond ratings for the nation’s third-largest public school system.
The Chicago Teachers’ Pension Fund was due $733.2 million this fiscal year and CPS had paid only about $19 million prior to Friday. The district said it plans to make the remaining $250 million payment with a fall infusion of property taxes.
The fund said it planned to charge the district interest on the delayed payment.
“While we appreciate this partial payment, it is our fiduciary responsibility to safeguard our members’ pensions, protect the fund, and make it whole,” Jay Rehak, president of the fund’s board said in a statement. “Our board has made it clear to CPS that we cannot accept anything less than full payment and compensation for any delays, and our trustees are fully committed to taking whatever action is necessary to reach this outcome.”
Earlier this week, the district completed a $387 million short-term loan with J.P. Morgan at initial interest rates as high as 6.41 percent to help cover the pension payment.
CPS has been scrambling to shore up its already-meager cash flow after Illinois Governor Bruce Rauner vetoed a one-time $215 million state cash infusion for pensions. Illinois’ ongoing budget impasse has also delayed state grant payments covering transportation and other services at CPS.
Reporting by Karen Pierog; Editing by Matthew Lewis and Andrew Hay